Bank of America ha ottenuto parere favorevole da parte di una corte distrettuale di Miami alla richiesta di un'ordinanza restrittiva alla liquidazione di asset legati a mutui immobiliari per 1 miliardo di dollari da parte di Colonial Bank. L'atto di citazione di Bank of America riguardava oltre 6mila mutui emessi da sue sussidiarie. Il giudice, nella sua motivazione, ha concluso che la misura era necessaria in quanto la Colonial "è sull'orlo del collasso".
La Colonial Bank ha 355 filiali in cinque Stati e 25 miliardi di asset. L'istituto è sotto investigazione da parte delle autorità federali per irregolarità contabili e potrebbe ora dover fronteggiare ulteriori difficoltà. Se non ce la facesse a sopravvivere, si tratterebbe del quinto più grande fallimento nella storia del sistema bancario americano e il più grande fallimento di un'istituzione finanziaria federale dopo la confisca e la vendita nello scorso Settembre della Washington Mutual alla J.P. Morgan. Ovviamente un' eventuale bancarotta costerebbe al fondo di garanzia del governo miliardi di dollari.
E per fortuna che solo qualche giorno fa Ben Bernanke si vantava di aver fermato l'Armageddon finanziario dandosi così da solo una bella pacca sulla spalla. Vedremo quello che accadrà a Settembre, forse anche prima, consapevoli che, come la storia insegna, la tragedia si ripresenta sempre come farsa.
Update. Non ho fatto in tempo a scrivere il post che la Colonial è già praticamente fallita. I funzionari della FDIC si saranno già presentati per il sequestro e per dare l'avvio alla procedura speciale. Una volta ripulita e risanata sembra ci sia già pronto il compratore, la BB&T, una banca regionale del Sud-Est americano. Anche questa volta è andata "meglio delle attese". O no?
fotomontaggio tratto da LOLFed
BUON FERRAGOSTO A
I gestori comprano dicendo che la recessione è finita ormai (vedi Pil di Francia e Germania ieri +0.3% per la prima volta da inizio 2008), nel 2010 ci sarà la ripresa, gli utili torneranno su del 50% dai livelli attuali e quindi compri ora in anticipo di 12 mesi come nel 2003 ("...gli utili nel 2010 dell'S&P 500 da 40 dollari saliranno a 70 dollar per azione, quindi 70$ X 16 (P/E) = 1.100$ circa come valore per l'S&P, siamo a 1.000 e può salire a 1.100 ...)
Questo ragionamento funzionava quando la recessione era quella solita causata da una stretta monetaria delle banche centrali preoccupate dell'inflazione come negli anni '70, '80 e nel 2001, quando Grenspan alzò i tassi al 6.25% e fece scoppiare la bolla, poi nel 2003 la FED tagliò all'1%, Bush disse che era dovere patriottico dopo l'11 settembre andare a fare shopping, le case aumentavano del 10% ogni anno di valore e l'economia ripartì.
Ma ripartì caricandosi di debito e adesso è satura di debito, le famiglie americane ad esempio vogliono risparmiare un 7-8% del loro reddito come una volta invece di zer come facevano dal 2000 in poi come si è visto anche nei dati di ieri, ogni mese riducono i consumi. Dato che il loro consumo sono circa 10.000 miliardi l'anno vengono a mancare 800 miliardi l'anno (in realtà di più perchè riducono anche l'indebitamento)
Ma non lo dico io, Obama ha detto in TV:"...è venuto a mancare un trilione di dollari di consumo.. (1.000 miliardi) ... e bisogna che lo stato allora lo fornisca lui...". Questo è lo stesso ragionamento che faceva Peron e tutti gli altri leader sudamericani, stampiano moneta e accumuliamo deficit per tenere su l'economia ed è incredibile che venga preso sul serio
Questa crisi è totalmente diversa, è simile a quella dell'Argentina o del Sudamerica o di altri paesi emergenti che venivano schiacciati dal debito e deficit eccessivi, solo che ci sono USA, Inghilterra, Spagna, Est Europa, Irlanda e in buona misura anche il resto dei paesi occidentali e Giappone al posto dell'Argentina. Le banche centrali hanno non solo tagliato a zero i tassi, ma stampato moneta per la prima volta nel dopoguerra comprando circa 2.000 miliardi di debito e promettendo di comprarne ancora e gli stati hanno tutti sfondato il deficit arrivando all'8 o anche 12% di deficit annuo sul PIL. In aggiunta a questo hai quello che gente seria come Andy Xie chiama lo "schema di Ponzi" della Cina che può saltare in qualsiasi momento
Questo è esattamente quello che faceva l'Argentina nel 2001 o il Messico nel 1993 o il Brasile non so quando, replicato su scala globale dalla maggioranza dei paesi occidentali (+ Giappone)
E' una crisi in due stadi, è impossibile che sia finita così, con le banche centrali e i governi che si indebitano e stampano moneta e tutto torna a girare, altrimenti l'Argentina sarebbe il paese più prospero del mondo.
E una crisi che finisce solo quando hai un crac valutario e obbligazionario finale a causa dell'eccesso di debito accompagnato ad una crisi politica
di Ralph Nader - 14/08/2009
Mi sono chiesto spesso perché la gente che va ai "comizi cittadini", tenuti dai politici che fanno campagna, raramente fa domande fondamentali.
Eccone una che poteva essere fatta al candidato presidente B. Obama: "Se voi arriverete alla Casa Bianca, nominerete alle posizioni più alte Americani che hanno un'esperienza record nel prendere le decisioni giuste nei loro settori rispettivi?"
"Certamente, lo farò", Obama avrebbe risposto senza dubbio.
Certamente, egli non lo fece quando si verificò il collasso dei casinò corrotti di Wall Street e il salvataggio di questi speculatori fatto dalla gente americana.
Obama scelse dei perfetti Wall Streeters e servi di Wall Street che erano coinvolti, compensati, o avvantaggiati dalla bisboccia speculativa che condusse al più grande schema di salvataggio governativo nella storia mondiale.
La spiegazione del Presidente è che vuole persone di esperienza che sanno come lavora Wall Street.
Si, giusto! In realtà, voleva copertura politica.
Qualcosa di molto importante è dimenticato quando anche persone che fanno parte della classe dirigente sono ignorati, emarginati o ridicolizzati anche se i loro allarmi pubblici e dettagliati cercano di essere tutti molto accurati.
Pensate al miliardario, Ross Perot.
Negli anni '80 e '90, Ross, come tutti lo chiamano, aveva ragione su General Motors, sull'accordo NAFTA e sui deficit federali.
Nel 1984 entrò nel Consiglio di Amministrazione di GM dopo averle venduto la sua impresa di successo (EDS).
Egli riuscì a malapena a credere quanto fossero ottusi, burocratici e insensibili i dirigenti di GM che la dirigevano. Egli cercò di svegliare i ragazzi al vertice per scontrarsi con la competizione di Asia ed Europa che cresceva veloce.
I capi di GM non potevano sostenere Ross "alla grande" e riformare tutta l'impresa, così nel 1986 essi comprarono le sue azioni in cambio delle sue dimissioni dal Consiglio.
Due anni dopo, riflettendo sulla sua esperienza a GM con un reporter di Fortune, Perot definì "il sistema di General Motors una coltre di nebbia che impedisce alla gente di fare ciò che sanno che andrebbe fatto".
Scaldandosi, Perot continuò: "Un giorno feci un discorso ad alcuni vecchi dirigenti. Dissi, Okay, ragazzi, vi dirò tutto quello che è sbagliato. Non amate i vostri clienti. Non amate i vostri concessionari. Non amate la gente che vi fa le auto. Non amate i vostri azionisti. E, in larga parte, non amate nessuno. Per far vincere questa impresa dovremo arrivare ad amare i nostri clienti. Non dobbiamo logorare i concessionari che fanno troppo denaro e non pensiamo che incassino $1 miliardo all'anno come noi. I ragazzi delle fabbriche sono il sale della terra - non cani - matti, rabbiosi, radicali nati per creare problemi. E tutto questo punzecchiarsi l'un l'altro - i ragazzi della finanza contro quelli delle auto - è terribilmente distruttivo".
GM non ascoltò Ross.
Ora, dopo una scivolata lunga e senza rallentamenti, GM è in bancarotta, abbandona i suoi operai, duemila dei suoi concessionari, e le rivendicazioni dei suoi clienti.
Tuttavia, GM deve al contribuente USA oltre $70 miliardi.
Perot si dedicò molto al suo libro pubblicato nel 1993 Save Your Job, Save Our Contry to NAFTA and Trade.
Guardando indietro, aveva ragione quasi sempre.
Il NAFTA dissipa più lavori USA di quelli che creò; generò un enorme deficit commerciale con il Messico e beneficiò i "36 uomini di affari che possiedono i 39 conglomerati più grandi del Messico o oltre metà del PIL di quel paese".
Le fabbriche "maquiladora" situate al confine hanno alti ricambi di operai e li spremono con condizioni spesso insicure e bassi salari.
Perot descrisse così la scena dietro alle esultanze di Washington (DC) e delle imprese sul grande incremento commerciale dopo il NAFTA:
"La maggior parte delle merci prodotte nelle maquiladoras sono spedite nel mercato USA. Di fatto, la maggioranza del cosiddetto commercio tra USA e Messico non è tale almeno se lo si considera col significato solito. Piuttosto, in principio le imprese USA spediscono i loro macchinari, i componenti e le materie prime oltre il confine nello loro fabbriche messicane e dopo rispediscono le loro merci finite o semi lavorate indietro ancora oltre il confine negli USA".
Una gran parte dell'industria dell'auto USA andò a sud dopo il NAFTA, lasciando i lavoratori e le comunità in difficoltà in Michigan e altri stati.
La bancarotta Chrysler progetta di spostare uno stabilimento moderno di motori da premio dal Wisconsin al Messico dopo aver preso i miliardi di dollari del salvataggio del contribuente.
Sugli avvertimenti di Perot sul deficit visti sulla TV nazionale (con grafici) che aggiungere?
Certamente egli non immaginò quello che avrebbe visto dopo i suoi richiami squillanti.
Il peso sulla prossima generazione e i dollari di tassa deviati dalle necessità della nostra nazione per pagare gli interessi su questi miliardi di dollari di debito furono evidenziati molte volte quasi venti anni fa dall'imprenditore tessano.
Ha un sito web (perotcharts.com) dove aggiorna le perdite.
Nella Washington di Bush e Obama, non ci sono posti dove Perot abbia visibilità e sostegno.
E' un fatto che i politici di Washington ignorino i commentatori progressisti veggenti, come William Grieder, che era stato giusto in modo profetico.
E' veramente un'altra fuga dalla realtà il voltare le loro spalle anche ai leader stessi del mondo degli affari.
Ci sono molti come Perot che devono essere guardati dai notiziari quotidiani mentre dicono "vi dicemmo questo, ma voi non ci ascoltaste allora e non ci ascoltate ora".
*Il titolo e i trattini fra le parti sono una nostra scelta (ndt)
Tradotto da F. Allegri il 13/08/2009 per Futuroieri http://digilander.libero.it/amici.futuroieri
Tante altre notizie su www.ariannaeditrice.it
The Paradigm Shift continues to displace the power centers and introduce new ones. Those bright souls who ignore the shift will be well prepared for systems that soon do not stand. The Americans are the last to know, oblivious to the global shift in progress. They continue to seek a return to normalcy, when old conditions are as gone as a baby's innocence during teen years. The crux of the matter is that the United States is no longer in control of its fate. Meetings with creditor nation leaders result in new orders given, and new policy directives enacted. Comparisons are made to China, but they too are a distraction. China can embark on its own path, can stimulate with huge sums of money, since they have actual savings. The US has massive debts, as insolvency has infiltrated to destroy systems pertaining to banking, home mortgages, federal operations, and industry. The nation is as hollowed out as its leaders are compromised. The major theme of this decade is USGovt leaders working hidden agendas. To be sure, tremendous stress is at work within USGovt agencies, ministries, and elsewhere. My focus is primarily on the financial impacts, never to be swayed by official stories and pronouncements.
Shocks, Stresses, Breakdowns, Plans
Back to reality on US soil. Many reports have come to the effect that at the end of August, a financial breakdown is due, and a shutdown of US banks is planned. We await the trigger events with mystery and intrigue as overtones. Some on Wall Street, arrogant to the end, believe that widespread awareness prevents the actual unfolding of events. They are suffering from a terminal disease though, as they believe they are in control. They are not. The USGovt creditors are in control. The August Hat Trick Letter reports have identified five major factors pointing to a severely stressful period of time at the end of August and into September. The FDIC is scheduled to release its Second Quarter Report that could reveal up to 1000 banks expected to croak, surely enough to exhaust their rescue fund by between 20-fold and 100-fold. Tin cups are heading to the USCongress committees. The USGovt federal limit must be extended again, and Treasury Secy Geithner has requested a $12.1 trillion limit. That limit must be extended sometime again soon, like before next spring 2010. Maybe September 15th and March 15th could be declared Debt Limit Extension dates officially, and make them national holidays. The nation could celebrate debt. Details are in the report, but surely not a blow by blow outline, since a crystal ball is not an office feature.
To be sure, many tripwires are laid out from the systemic complexity and lost control, not to mention haphazard design and frenzied defense. A massive juggling act is taking place, as US bank and political leaders are juggling more balls, and heavier balls with each passing month.. The risk of accidents is rising exponentially from incredible backroom movement of massive funds to avert disasters on a weekly basis. WHEN IT COME THE ACCIDENTS, PLANNED EVENTS, OR UNEXPECTED RESPONSES TO MINOR DISTURBANCES WITHIN THE SYSTEM, TREMENDOUS COLLATERAL DAMAGE WILL ARRIVE, BUT THE PRECIOUS METALS WILL STAND TALL AND ENDURE EFFECTIVELY, EVEN THRIVE. See gold, silver, and platinum, at least. The broken parts and â€˜bad apples' are likely to be eliminated in a flash. We will see. People will be hurt, and life savings will take hits. Even communication lines will be interrupted. Power structures will dissolve. We are approaching historically unprecedented times. The signs are omnipresent, often ignored.
My best sources of information report that some unexpected deep shocks are coming from USGovt creditor nations. They are simply fed up, frustrated, and astonished at the manner of lost control, spiraling debts, and blatant monetization amidst lies in denial of that same monetization. The USTreasury auctions now have domestic hidden elements, and global hidden monetization elements. The USFed is purchasing through Permanent Open Market Operations the bonds grabbed by the primary dealers. Some of the auctions are actually underbid, and fortunately for the statistics, the bid/cover ratio includes obligated dealer bids. The USFed liberally uses its USDollar Swap Facility to enable strong bids by foreign central banks, except that they are highly likely coming from USFed accounts on foreign soil, or else from money lent by the USFed itself. Warning after warning have come not to monetize, not to debauch the USDollar currency, not to permit skyrocketing deficits. Yet they continue, and worse, little if any reform or actual stimulus has occurred. Mainly what we witness is more channeled funds to the big banks, more coverage of credit derivative fires, and more announcements of bond support. See the $1.25 trillion support for Fannie Mae bonds, aka USAgency Mortgage Bonds. The Green Shoots have now been dismissed as a marketing ploy. The Stress Tests have now been dismissed as a marketing ploy. The Stimulus Plan has now been dismissed as a marketing ploy. The only USEconomic recovery will be a statistical recovery. A Jobless Recovery is a recovery for stocks and a redemption for the bankers. Main Street continues to be discarded.
The next shock is most likely to come from USGovt creditors, the holders of vast sums of USTreasury Bonds. They are ready to begin a salvage operation, whether coordinated or not (who knows?), that results in massive sales well over $100 billion in magnitude, maybe several hundred billion$ worth. They have stated to the USGovt their concerns about lost valuation, lost integrity, and continued threat of debasement. They are frustrated that not only are USGovt deficits enormous and unprecedented in size, but further expansive programs like Health Care are in planning stages. The creditors regard the US political and banking leaders as living in a world divorced from reality, and thus require shock treatment. USTreasury Bonds have become a liquidation currency. Actions in the Persian Gulf and European region indicate that USTBonds are being used in liquidation and distressed sales on a truly massive scale. The failed Dubai construction projects are involved in the former, the Chinese expansion (some say carpetbaggers) are involved in the latter. Details appear in the August HTLetter reports. My forecast made in September 2008, almost one full year ago, of a USTreasury Bond default has been almost uniformly mocked, denigrated, and dismissed as an impossibility. Get back to me in a few months! In fact, the widespread restructuring of USTreasurys by the creditors is a massive global project underway. The shift from long-term to short-term USTreasurys by the Chinese is but one piece. The conversion by several parties to hard assets is another. Eventually, the USGovt will work toward a formal writedown in the debt and a conversion to property, industrial plant, energy and mineral rights, farmlands, and more. That will constitute the default, but it will be denied.
As a last footnote, never overlook the continued urgent Chinese initiative to â€˜spend' their USTBonds quickly, for useful tangible purposes, before any damaging sequence of events occurs.. Simon Black (aka the International Man) wrote, "I have been spending a lot of time this week talking to my sources in China, one of whom is inside one of the country's sovereign wealth funds (SWF). He also indicated that the SWF analysts were working around the clock trying to put deals together. For China it is a race against the clock for how fast they can convert their $2 trillion in USDollar holdings into strategic assets, namely oil and gold. At today's deflated prices, putting together a really good billion dollar deal is a difficult thing to do. Putting together 2000 of them is impossible. Doing it before the dollar collapses? Not a Chinaman's chance. And they know it."
US Dollar, US TBond, and Gold
The USDollar is clearly the weakest link stress point. In fact, the battle for gold has morphed into a bilateral quiet war between the United States and China. The US has debts and a powerful military, with retained control of the US$ Printing Press, not to mention significant institutions of financial controls and levers. The Chinese have a staggering savings account, in the form of a few key sovereign wealth funds, with ongoing trade surplus accumulation, and a shiny new industrial sector. The USGovt pours out new USTreasury Bonds to cover its debts. The Chinese exact severe but hidden terms for continued credit support. Lost sovereignty is a process, not an event! More details in the August HTLetter reports.
Whatever the machinations in the new World Financial War, watch the performance of the USDollar, the USTreasurys, and Gold. They are each signaling significant changes in the near-term, as in the next several weeks or few months. In my basic view, the breakdown in the US$, the rise in the 10-year TNote yield, and the breakout over $1000 in gold will all occur when China decides to make them happen. It is on their timetable, not ours.
Stress Points Too Numerous
Jobs continue to be lost, with exaggerations and deceptions rampant. Seasonal adjustments and continued Birth-Death Model hokum continue to be relied upon. The end of the General Motors plant shutdown, and the magnificent but costly â€˜Clunker' rebate program do not a recovery make. Almost half a million people fell off the state unemployment insurance system in July, which was hailed as evidence of a recovery. The home prices continue to fall, but less quickly. The home loan delinquencies and foreclosures continue unabated, up 7% from June to July alone. The USGovt has become the pathetic new Subprime Lender of last resort, statistical details provided in HTLetter reports. The ugly story in the housing market is the hidden overhang of bank-owned (REO) properties, which bankers withhold from the market. So the home inventory figures are much worse than reported. The people and investment community desperately want a recovery to occur. Their lack of economic savvy permits them to be betrayed and misinformed consistently. They do not realize that debt cream cannot heal debt wounds from deep knife cuts at the hands of job loss and home equity loss. They do not realize that redemption of worthless mortgage bonds held by the big banks does not constitute a reform of the banks, who still hold deeply impaired bonds on their balance sheets, or rather off their balance sheets. They do not realize that ballooning USGovt deficits have failed to rebuild or revive American industry, which still lies in China. Nationalization is not Reconstruction.
Plummeting tax revenues come when President Obama and USCongress pile up major deficits, from stimulus plans, from bank rescues, and expansion of health care. The numbers are worse than fiction. Tax receipts are on pace to drop 18% this year, the biggest single-year decline since the Great Depression. An Associated Press analysis provides details on the recession's impact and federal insolvency. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. Thus pressures build for more hidden monetization, and more retaliation by creditor nations.
The service sector, which makes up nearly 90% of the USEconomy, unexpectedly shrank at a faster pace in July than in the previous month. So economic activity continued to decline last month despite the propaganda promulgated by prattle specialists. The Institute for Supply Management (ISM) reported Wednesday that its non-manufacturing index declined to 46.4 last month from 47 in June. It was the first decrease since March. Readings below 50 indicate contraction, while readings above 50 represent expansion. Their report monitored business activity, employment, order backlogs and new orders, including those for export. They all declined slightly more in July than the previous month.
DeutscheBank forecasts 48% of all US mortgage loans to be underwater by 2011. Ouch! Borrowers of loan products with already high underwater rates will only grow worse. By 2011, DBank predicts 89% of Option ARM borrowers will be underwater, up from 77% in 2009. That is correct, 77% of current Option ARM mortgages are stuck with negative equity, upside down. That is a recovery??? No! It is the source of further home price declines, to any analyst that features a brain stem. They expect the rate of underwater subprime borrowers to increase from 50% to 69%, and underwater Alt-A borrowers to increase from 49% to 66%. Then there is the commercial mortgage wrecking ball soon to hit the financial bank structures. The $3.5 trillion commercial real estate market is eroding. Defaults are doubling on loans for apartment buildings, office buildings, housing complexes, strip malls, hotels, hospitals. A staggering amount of loans must be rolled over this year into refinancing, or else go bust with liquidation to follow. Prices in commercial real estate have fallen about 39% from the peak in mid 2007, according to the MIT Center for Real Estate, with no signs of improvement or abatement.
FDIC Chairman Sheila Bair believes up to 500 more banks could fail, according to conversations between US senators and Bair from recent meetings. That story received little if any coverage. The real number is 1000 banks, from Bair's own conversations. Little banks are dropping like flies, and we are due for a big bank to fail very soon. No need to guess, since accidents will be random among the crippled edifices. The biggest bailed out banks merely invest in USTreasurys, capturing easy profits from the steep yield curve. Lastly, prepare for a big surprise. AIG will soon be forced to reveal it is bankrupt again, encountering another painful failure, despite all its falsified reports of revival. It is dead, even after $180 billion in aid. AIG has been busy conducting a shell game to move assets from recently audited subsidiaries to the next subsidiary to be audited, in order to hide its neverending bust played out. It is a veritable Black Hole under the USGovt roof. For each and every sector of the ailing defunct landscape, one can safely said THAT AINT RECOVERY, FOLKS!! Stimulus, rescue, bailouts, nationalizations, and more USDollar ruination lie directly ahead. Gold will thrive in the coming months, as panic sets in.
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
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The most dramatic image, which involved a water torrent sucking away the sand beneath a stoutly built six-story hotel, struck me as an apt metaphor for the current economic environment. As the hotel's foundations became exposed, the building toppled over like a massive domino. It was a vivid reminder that no structure, no matter how mighty, is safe if its foundation is weak.
Since the financial deluge erupted last year, the authorities, at least in the United States, have concentrated their repair efforts on the upper floors of our economy, and have virtually ignored the rotting foundation beneath.
Since 1971, when President Nixon broke the last link between gold and the U.S. dollar, American politicians have unleashed an ever-increasing number of entitlement projects designed to boost consumerism. With some 70 percent of our economy now based on consumption, we can safely say they accomplished their aim.
Following Alan Greenspan's financing of the largest asset boom in the history of the Fed, America now faces massive deleveraging and a severe recession. However, it is becoming increasingly clear that neither the Obama Administration nor Congress have the slightest appetite for the political costs of deleveraging. Instead, the government has decided to lavish unprecedented trillions more of borrowed dollars on preventing a natural deleveraging from taking place.
Today, the official U.S. Treasury debt stands at a shocking $13 trillion, or 100 percent of the (declining) total wealth created in the United States each year (GDP). But total federal debt amounts to an almost unimaginable $56 trillion, or 4.3 times GDP.
Notwithstanding this precarious state of affairs, the government intends to spend trillions more dollars on wealth-consuming entitlement projects such as education, health care, auto sales, and the pursuit of fruitless wars in Iraq and Afghanistan.
America still has the largest economy in the world, but that doesn't mean that it is the richest. Although Americans enjoy one of the world's highest standards of living, they are also its largest debtors. As a result of the debt, which is subtracted from output, the worldwide rank of U.S. GDP is not first, as most would expect, but fifteenth!
For many years, two factors have prevented rank-and-file Americans from perceiving the weakness of our economic foundation. First, the international reserve status enjoyed by the U.S. dollar has delayed severe price erosion and allowed Americans to buy imports at a falsely advantageous price. Second, American living standards have long been heavily financed from abroad, most notably today by China.
The Chinese have recently expressed grave concerns about depreciation of their dollar-denominated assets and openly challenged the reserve status of the dollar. As Chinese support is vital to our currency's continued viability, these threats are bound to exert downward pressure on the price of the dollar. In short, China is increasingly unwilling to finance America's falsely high standard of living. If the Chinese pull out, where else can the U.S. turn?
Last week, in response to questions about the sustainability of Washington's spending spree, Tim Geithner uttered one of the more ambiguous phrases ever from a sitting Treasury Secretary, saying, "the government will have to do what the government has to do." His comments went unexplained and could have referred to massive future tax increases. More ominously, they could have hinted any measure from an extended "bank holiday," to currency exchange controls, or even to a massive devaluation of the U.S. dollar (similar to the 75 percent devaluation instigated by Franklin Roosevelt in 1934).
Increasingly, it appears that the government is aware that its reckless expenditures will be financed less by foreigners and increasingly by current, and more importantly future, U.S. taxpayers – and potentially by a severe devaluation of the dollar.
It does not take a student of architecture to grasp that America's very structure is becoming more and more vulnerable to the shifting sands of economic policy being made in foreign capitals, and blowing upon our shores.
For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, you need to read Peter Schiff's new book "The Little Book of Bull Moves in Bear Markets." Click here to buy it now.
More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download our free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to our free, on-line investment newsletter.
However, if you have revolving balances on your credit cards, this is no time to relax. The law does not take effect until February 2010, giving credit card issuers a window to jack up fees and interest rates. It also fails to set an upper limit on these charges at the federal level. As financial institutions can incorporate in states without legal limits, major credit issuers can continue to charge any rate they wish as long as they disclose it. This permits banks to borrow from the Federal Reserve at a fraction above 0%, paying ridiculously low yields on deposits, while charging their credit card customers many times that percentage. For example, Wells Fargo is currently paying a laughable 0.05% on savings accounts in my area, with a $300 minimum balance.
The newest proposal debated in Congress is the formation of a Consumer Financial Protection Agency, which would allegedly protect the public from unscrupulous lenders. Politicians claim that fraud and risky financial behavior "fell through the cracks" in the regulatory system, even though many of these same individuals advocated for fewer controls a decade ago. Why should citizens believe that the same bureaucrats who failed to stop Bernie Madoff's Ponzi scheme will act in their best interest?
It's naïve to expect the U.S. government to take aggressive action against financial institutions, as both political parties receive ample campaign contributions from banks like Goldman Sachs. After all, Congress voted to make punitive changes to the bankruptcy laws in 2005, parroting the industry propaganda that many borrowers ran up their credit cards and then declared bankruptcy in order to avoid repaying their debts. In contrast, Elizabeth Warren's data shows that 90% of bankruptcies are caused by family breakup from death or divorce, job loss, or health problems, not conspicuous consumption. The real gamers of the system were not borrowers, but the banks themselves.
The law, written by card issuer MBNA, made it more difficult and expensive to discharge debt, and limited the assets that could be protected from collection by unsecured creditors like - you guessed it - credit card companies. Sheltered by legislators, underwriting standards dropped on all sorts of consumer loans after the passage of this law. The banks were able to continue their pyramid scheme of packaging poor quality debt as AAA rated securities, selling it to trusting investors, and using that capital to make even more bad loans. Ratings agencies like Standard & Poors were complicit in the scheme, using the banks' own models to evaluate these derivatives.
When this house of cards finally came tumbling down, it wasn't the consumers who were helped, but rather the banks who cynically gambled with shareholders' capital. Legislators allowed institutions to get "too big to fail" by eliminating protections like the Glass-Steagal Act in 1999, then threw trillions of dollars at these same banks when they later became insolvent. As Allan Sloan puts it, Wall Street's attitude is "heads I win, tails I get bailed out." Even sadder, the American taxpayer is still vulnerable to further "rescues," as the mega-banks have not been chopped into manageable pieces, and they are still permitted to takeover their smaller insolvent rivals.
In reality, there is no need to create additional agencies or new burdensome regulation. There are plenty of laws against cheating and stealing on the books, just a lack of enforcement. For example, the FBI could have prosecuted financial crimes but much of the agency was diverted to fighting terrorism after 9/11. The CFTC pretends it doesn't see the obvious manipulation in the precious metal markets, while the SEC has resisted prosecuting naked short sellers.
While Congress intervenes overtly in the credit markets, the Federal Reserve is acting as a debt pusher behind the scenes through the Term Asset-Backed Securities Loan Facility, or TALF. As this initiative is administered by the Fed, it lacks even minimal Congressional oversight. When the credit markets froze last year, the Federal Reserve designed this program to give loans to investors who want to buy consumer debt instruments. The Fed's intervention increases the moral hazard in the economy by creating an artificial market for these derivatives. If lenders did not have a market for consumer debt, they would have to cut credit lines and close accounts. This would force fiscal austerity even in people reluctant to slash discretionary spending. However, beneficiaries like Cabela's, a sporting goods company, are now marketing additional credit to customers, backstopped by Federal Reserve guarantees.
Chairman Ben Bernanke claims that TALF and similar bailouts are "emergency programs" that will be terminated soon, but their influence is already warping the business environment. Subsidies choose winners and losers, swamping any competitive advantages. Large corporations have an advantage over smaller companies, as they can afford to fill out the paperwork and lobby for access to bailouts. This crushes new innovative businesses, dampening job creation.
Despite the Federal Reserve's disastrous stewardship, Congress plans to convert it into a "super-regulator," giving it even more control over the U.S. economy. The Fed already has few checks on its power, as it is a private entity, not part of the government as many believe. In addition to driving monetary policy, it would gain "sweeping new authority to regulate any company whose failure could endanger the U.S. economy and markets." This change would "sidestep most jurisdictional disputes" and centralize the economy under the direction of an unelected non-governmental body run by the banks.
The Democratic leadership intends to push this through Congress quickly, in what I think is a reaction to Dr. Ron Paul's successful Audit the Federal Reserve campaign. He already has enough co-sponsors to pass his bill in the House of Representatives if it were allowed to come to a vote, but party leaders have blocked it. If the Fed gets to captain the economy, it can refuse to account for its actions as a matter of national security.
For years, the American people have passively allowed the banks to rake in obscene profits on the backs of the taxpayer. Finally, we are seeing some grassroots resistance to this blatant favoritism, with "tea party" protests and angry constituents confronting their representatives at formerly placid town hall meetings.
Unfortunately, this awakening is too late to prevent the destruction of the U.S. dollar. The debt bubble has already burst, and the attempts by the Fed to reflate it have created an enormous burden on the U.S. taxpayer. Since I first detailed the bailouts last October, obligations have ballooned from approximately US$2 trillion to an incredible $23.7 trillion according to Neil Barofsky, the special inspector general of the Troubled Asset Relief Program (TARP).
Don't expect any government agency to protect you from the coming hyperinflationary depression in the U.S. Now is the time to reduce your debt, sell off unwanted assets, and live below your means. During times like these, paper assets have historically performed poorly, so move your savings into hard assets like the precious metals instead.
Copyright © 2009 Jennifer Barry
Pubblicato da Debora Billi alle 09:47 in
- Ci deve essere una fonte energetica là sotto...
Pubblicato da Debora Billi alle 09:17 in Vita quotidiana
A proposito di lavoro, ricordate gli inglesi che lavorano gratis e i californiani in cassa integrazione? L'italianizzazione del mercato del lavoro anglosassone prosegue, con ulteriore stupore del New York Times.
Anzitutto, la fuga dei cervelli. Cosa fanno i laureati americani, che non riescono più a trovare lavori strapagati nel giro di una settimana? Se ne vanno a cercare un posto in Cina. Almeno riescono ancora a piazzarsi in ruoli da manager anziché nei call centers.
Secondo: gli stages aggratis. Non suona nuovo a noialtri, ma in USA ha qualcosa di inaudito che i genitori paghino per far ottenere, attraverso apposite agenzie, degli stages gratuiti ai loro figli disoccupati e col pezzo di carta.
Chissà in inglese come si traduce bamboccioni.